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It looks as if the blistering pace of condo development fell faster than a Sid Fernandez curve ball in 2006.

So, what spooked the developers?  Maybe some MLS statistics can shed some light.

• There are currently 14,351 homes for sale classified as CONDO
• 7,531 of those homes have no tax bill assigned

In other words, more than half of the condos for sale in Chicago are new construction condos for sale by developers.  Most of it is is concentrated in River North, River West, the Loop and South Loop.

This is bad news for home sellers that are not developers. 

"Normal" sellers are fiercely competing with new construction condo developers whose financial motivations are very, very different from the Normals. 

Developers hate to drop prices because of how it impacts every other unit in the building.  So, they offer "free upgrades" or "free tax payments for two years" to make the property more attractive to buyers.

Regular homeowners, on the other hand, don't have the inclination (or the money) to match these negotiation styles. 

When an offer is $20,000 too low, the seller doesn't say "the price is firm but I'll put $20,000 into a new kitchen for you."  Instead, it's the predictable pattern:

1. Drop Price
2. Wait For Buyers
3. Repeat as Necessary

A deeper search shows that 22 percent of Chicago's listed condos have been on the market for six months or more.  Of those, 74.4% belong to developers.  It's no wonder that construction downtown is stopping so quickly.

Source
Apartment Wave Forms on Chicago Horizon
Alby Gallun
Crain's Chicago Business, August 21, 2006

http://chicagobusiness.com/cgi-bin/news.pl?id=21788

Dan Green is an active loan officer. Email or call 513-443-2020. Dan is on Twitter at @mortgagereports.